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How the Recession is Good for the Environment

To savvy snowboarders, Baikalsk has long been the beautiful resort where visitors are so few you can feel as though you own the mountain, at least temporarily: for about 5,000 rubles ($175), you can have exclusive use of one of the six long runs for the day and never see another soul as you schuss through forests. Of course, you've had to tolerate a smell that seemed to be a blend of rotten cabbage and New Jersey Turnpike. For in addition to the resort, this town on Siberia's Lake Baikal—the oldest, largest and deepest freshwater lake in the world—is home to the Baikal Pulp and Paper Mill, which has been belching foul-smelling sulfates into the air and chlorides, phenols and other chemicals into the lake since it was built during the Cold War. The pollution killed plants, crabs and fish and threatened the world's only freshwater seal, the earless nerpa. Environmentalists have been trying to shut down the mill since 1964, getting precisely nowhere. But where greens failed, the global recession succeeded all too well. In November, the plant ceased production. "The economic crisis," says Marina Rikhvanova, the head of the environmental group Baikal Wave, worked "like magic."

It is no coincidence that some of the dirtiest industrial operations are falling victim to the global recession. Over the past two decades, much of the world's manufacturing moved to where pollution standards are little more than mild suggestions. Since small, corner-cutting, inefficient facilities tend to both flout pollution laws and be most vulnerable to a sudden drop in demand, the global recession has hit such operations especially hard. Thousands of factories in China's Pearl River Delta have shut their doors since late last year, for instance; output of autos, electronics and other goods from factories in Mexico's Ciudad Juárez, Monterrey and Toluca has fallen so sharply that the amount of cargo trucked across the U.S. border has dropped 40 percent. In India, enough small steel-rolling mills around Delhi have closed that levels of sulfur dioxide (which forms acid rain) fell 85 percent in October 2008 compared with a year earlier. The recession is bringing a green dividend in the developed world, too. Reduced economic activity is projected to cut Europe's emissions of carbon dioxide, the chief man-made greenhouse gas, by 100 million tons in 2009, and the United States' by about the same amount.

Recession is not exactly a long-term environmental strategy, obviously. The challenge is to use the downturn to deemphasize manufacturing in favor of cleaner economic activity, and to reengineer what survives so that when the economy revs up it's not at the environment's expense. Even world-class polluters get it. In China, as factories seek lines of credit to see them through the downturn, local governments are "less likely to help companies that are considered major polluters," says economist Deng Yupeng of Dongguan University.

At Baikal, the post-recession economy is poised to undergo a more radical shift, from pulping trees to serving tourists. One weekend in February the mountain was packed with skiers and snowboarders. Resort manager Yury Shiriak says that in December they had 7,000 visitors, compared with the usual 1,000. "Baikalsk will slowly transfer from an industrial place hated by ecologists into a tourist paradise," he predicts. It will help that the air and water are already cleaner. Only three months after the mill closed, locals already noticed a change. "We are so used to pollution, to the smell of rotting cabbage," said Andrei Pylukh, an artist. "The fresh air feels unusual. I see so many more birds on the lake and in my garden." The challenge for Baikalsk is to invest in hotels, restaurants and other labor-intensive, less-polluting businesses so the mill remains a permanent victim of the green recession but the town—which lost 2,300 jobs when the mill closed—doesn't.

The impact of China's slowing economic growth (6.8 percent in the fourth quarter last year but 13 percent in 2007) has hit hardest in cities in the export-heavy south such as Dongguan. There, roughly 10 percent of the 22,000 factories have closed since last year. In Zhejiang province, just south of Shanghai, at least 60,000 small factories are shuttered. Survivors have slashed production and grounded fleets of diesel-fume-belching trucks. As a result, streams where factories dumped their waste are getting cleaner and the air is less smoggy. In 2008, the number of days with dangerous levels of air pollution in Dongguan fell by 65 from the year before, mostly in the final months of the year. "When there's less work, there's less release of sewage and trash, so environmental pressures have eased," says environmental scientist Liu Zhiming of Dongguan University of Technology.

But as in Baikalsk, the challenge is what to do when orders pick up again. If factories ramp up to 2007 production and pollution levels, the time-out offered by the green recession will have been wasted. There are hints that that might happen. Factory owners in China and elsewhere argue that their top priority should be job preservation, and that spending money on pollution controls or switching to renewable energy has to wait. In Guangdong province, factory owners are lobbying the government to roll back environmental standards that, they argue, have made them uncompetitive with Southeast Asia. And factory managers, under pressure to cut costs, know they can reap easy savings by turning off smokestack scrubbers and dumping waste rather than treating it.

But these may be the last gasps of dying industries. There are also signs that China, which has acknowledged that environmental damage had become a drag on the economy, may use the recession to retool part of its manufacturing sector. Some of a 4 trillion–yuan ($585 billion) stimulus package is targeted at projects that will improve energy efficiency, including wind and solar energy to power the "green economy" that Prime Minister Wen Jiabao called for. The Ministry of Environmental Protection reportedly rejected 11 projects because they consumed too much energy or would have caused too much pollution.

For some victims of the recession, using the downturn to institute greener practices is more of a challenge. About two thirds of Brazil's 200 million head of cattle graze in the Amazon where virgin forest once stood, making cattle the single biggest cause of deforestation there. Now falling beef prices (down 51 percent over the past 12 months) plus the shortage of farm credit have done what "save the rainforest" campaigns didn't: give Amazonia a reprieve. "The economic downturn is a natural brake on forest destruction," says Carlos Nobre, a climatologist at Brazil's National Institute for Space Research. The rate of deforestation from last November through January, the institute just announced, fell 70 percent from the same period a year before. The environment minister believes that's a result of greater enforcement, however, not of the recession's effect on ranchers. But you can say this for the downturn: it's much easier to enforce forest-protection laws when ranchers aren't all that eager to chop down the jungle.